Stress test: disciplinary action and stress

The Court of Appeal has summarised and clarified the correct
approach to a psychological injury (namely, a depressive illness)
caused by unfairly conducted suspension and disciplinary
process. As Julian Hoskins explains, the Court of Appeal
has built on the developing body of case law on stress at work
claims and confirmed that, usually, damages for such claims will
not be available where the employer believed that the employee in
question was mentally robust and could withstand a serious set-back
at work.

The background

Employers are under a common law duty (arising under the tort of
negligence) to take reasonable care for the health and safety of
employees in the workplace.

In addition, it is an implied term of every employment contract
that an employer must not damage or destroy the relationship of
trust and confidence between an employer and employee.

In order to succeed in a stress claim, the employee must
establish that the loss suffered was caused by the employer's
breach and was not too "remote" – i.e. that the 'loss' (usually,
and as in this scenario, a psychiatric illness) was
reasonably foreseeable.

In the case reported below, the Court of Appeal considered
whether it was reasonably foreseeable that an employee would suffer
a depressive illness as a result of his summary withdrawal from his
post as High Commissioner of Belize.

The facts

Mr Yapp was British High Commissioner in Belize. In June 2008,
allegations were made regarding Mr Yapp's sexual misconduct at
public functions and his bullying and harassment of his staff. Mr
Yapp's employer, the Foreign and Commonwealth Office (FCO) withdrew
Mr Yapp from his post with immediate effect and suspended him
pending the outcome of investigations. He was offered counselling
and told that if he was exonerated by the investigation, the FCO
would do its best to find him another posting.

A disciplinary hearing (heard by the same person who undertook
the investigation) took place and cleared Mr Yapp of the sexual
misconduct allegations but upheld the complaints of bullying.

Following the disciplinary process, Mr Yapp became depressed.
Even after his suspension was lifted, he was unable to return to
work. He finally left his employment due to retirement.

He claimed that the stress resulting from his withdrawal from
office and the unfair conduct of the disciplinary proceedings had
caused his depressive illness and financial loss.

The High Court found that the FCO had acted in breach of
contract and in breach of its duty of care by unfairly withdrawing
Mr Yapp from his post, and Mr Yapp was entitled to damages.

In particular, the High Court found the following.

Fair treatment required the FCO to conduct some preliminary
investigation into the allegations and to give Mr Yapp an
opportunity to respond to the case against him.

Confidentiality and the need to act quickly were insufficient
reasons for dispensing with fairness.

Had the FCO acted fairly, it would have soon transpired that
the allegations of sexual misconduct were "suspect" and there would
have been no basis for Mr Yapp's withdrawal.

Allowing the same person to conduct both the investigation and
the disciplinary hearing was unfair, but no compensation should be
paid for this, as the outcome was "almost inevitable" given the
facts found in the investigation.

The damage caused to Mr Yapp was "reasonably foreseeable"
because, although Mr Yapp was "ostenstibly robust", it could
reasonably be contemplated that depression could result from a
"knee-jerk withdrawal from post".

In withdrawing Mr Yapp from his post without informing him of
the case against him, the FCO was in breach of its common law duty
of care and its implied duty of trust and confidence.

The decision

upheld the High Court's decision on breach of contract and the
FCO's responsibility for causing Mr Yapp's illness; but

held that damages should not be payable to Mr Yapp for his
depressive illness and the financial loss that flowed from it.

The CA's reasoning was as follows.

Mr Yapp's immediate withdrawal from his post, without any
chance to rebut the allegations and without conducting any
preliminary investigations, was in breach of contract. It was
irrelevant for these purposes that Mr Yapp was subsequently treated
fairly in the disciplinary process and given access to independent
counselling.

In the particular circumstances, it was fair to appoint the
same person to act as both fact-finder and disciplinary
decision-taker. The Acas Code of
Practice on Disciplinary and Grievance Procedures recommends
that, in misconduct cases, it is good practice, where possible, for
different people to carry out the investigation and disciplinary
hearing. However, the CA said it was not a
requirement of fairness in every case. In the
present case, the FCO specifically decided that it was important
that the same person who had interviewed the witnesses should take
the disciplinary decision and the CA saw nothing wrong with
this.

The withdrawal from post directly caused Mr Yapp's
depression.

However, the loss caused by Mr Yapp due to the withdrawal was
not reasonably foreseeable and therefore could not
amount to a breach of the common law duty of care. Given that the
remoteness test for breach of contract claims is less favourable to
claimants, it followed that such loss was also too remote to be
recoverable in respect of the breach of contract claim.

In making its decision the CA took the opportunity to review the
case law on the foreseeability of work-related stress and found

such an injury will not usually be foreseeable unless there
were indications, of which the employer was or should have been
aware, of some problem or psychological vulnerability on the part
of the employee. An employer is usually entitled to assume
that the employee can withstand the normal pressures of the job
unless he knows of some particular problem or vulnerability.

That approach is not limited to cases concerning excessive
workload but extends to cases where the employer has committed a
one-off act of unfairness, such as the imposition of a disciplinary
sanction.

However, this is guidance only, and each case
must turn on its own facts. In exceptional cases, an
employer's conduct might be so devastating that even a robust
person might develop depression as a result. However, this was not
such a case. There was nothing so 'shockingly bad' about the
circumstances to render it foreseeable that Mr Yapp's withdrawal
from his post would cause him psychiatric injury.

The CA noted that, in reaching its decision, it had not attached
any weight to the counselling services provided by the FCO. It said
that the provision of counselling services is only relevant in
'ordinary' stress at work cases relating to excess workload and not
where stress results from a one-off event, as in this case.

What does this mean for me?

This decision is good news for employers in that it confirms
that courts and tribunals will be reluctant to find that an
employer is responsible for harm caused by a psychiatric injury
unless there is evidence of a pre-existing vulnerability, or unless
the employer's misconduct has been so atrocious that it could be
anticipated that even a robust individual would be likely to suffer
an illness as a result.

Although best practice would dictate that different people
should undertake a disciplinary investigation and hearing, it is
interesting to note here that the CA said that this does not always
need to be the case. However, it seems that there were
specific reasons here why the FCO felt that the same person should
be involved in both processes; the CA may have reached a different
conclusion if that had not been the case.

Finally, note that any counselling services that you offer may
well assist with defending a claim for stress at work related to
work load, but it is unlikely to assist if stress is caused by a
one-off event.

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The information on this website is of general interest about current legal issues and is not intended to apply to specific circumstances. It should not, therefore, be regarded as constituting legal advice.